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Transcript: Drug shortages Q&A by Sen. Ron Wyden

Senate Committee on Finance hearing on “Drug Shortages: Why They Happen and What They Mean” held on Dec. 7, 2011

Transcript of Q&A by Sen. Ron Wyden (D-Ore.):

Sen. Ron Wyden (D-Ore.) IMAGE SOURCE: finance.senate.gov

Sen. Ron Wyden (D-Ore.):

“Thank you, Sen. [Orrin] Hatch. Sen. Hatch, let me just commend you because you and I have worked often on these kinds of issues, and I think once again you’re headed in the right direction. I want you to know that I’d like to work with you again in this important area.

“For all of you as witnesses, you may know at the Oregon Science Center, we’re very proud to have Dr. Brian Druker, who developed Gleevec – it’s the breakthrough drug that targets specific cancer-causing molecules. I’ve come to conclude after talking to him and some of patients that there is absolutely no way that a solution here without overhauling the reimbursement kind of process. There are other issues that are important, but that’s right at the center.

“I can only imagine, Dr. Cobb, what it is like for you and stellar physicians like Dr. Druker to tell patients that these life-saving treatments that used to be available are no longer available. It’s a disgrace that in a country as good and strong as ours that that goes on every single day. That’s what we’ve got to solve. I think, as I’ve indicated, Sen. Hatch is in the right direction.

Now let me see if I can get in a couple of questions – I want to talk with you to start this off, Dr. Conti. Because with cancer drugs, reimbursement issues are a special challenge because there is an issue not only of the amount of the reimbursement but also who gets the reimbursement. With generic cancer drugs, for the most part, the person purchasing the prescription is the doctor as opposed to the patient. So if you could, just walk us briefly through how increasing the reimbursement of these drugs – they’ll be [Medicare] Part B drugs, outpatient drugs, for example, to seniors – to the doctors is going to provide greater incentives for a manufacturer to produce this supply.”

Dr. Rena Conti, Assistant Professor of Health Policy and Economics at the University of Chicago:

“Thank you. That’s an excellent question.

“There’s no doubt that physicians do appear to make prescribing decisions based on the alterations in the reimbursement for these therapies. And remember: physicians both receive reimbursement for the cost – for buying the drug – but also administering the drug to their patients. That’s a separate reimbursement line that physicians can receive.

“It is clear that increased payment for these drugs also increases incentives to choose kind of more carefully between generic and branded therapies. However, I am unclear how an increase in payment to physicians would be immediately passed through to manufacturers unless manufacturers increase their prices in concert and group purchasing organizations would allow these increased payments to physicians to flow directly through to manufacturers.”

Sen. Ron Wyden (D-Ore.):

“I want to ask one other question, Sen. Hatch, but I think this is certainly one that we’ll want to look at on a bipartisan basis because I’ve had a number of cancer physicians and companies asked me about the relationship of the physicians and the manufacturers. I think that’s one we’re going to have to look at.

“Now let me ask you one other question, Dr. Conti. Maybe some of the others would like to chime in on this. In effect, what Congress would be talking about – and you all referred, at least three of the four of you, in your testimony – to higher reimbursements in instances with respect to cancer care where the need was urgent or necessary. So in effect, Congress would almost be talking about a trigger that would, in effect, give higher reimbursements for drugs that were ‘urgent or necessary.’ I got to think that the American people are saying, ‘Holy Toledo. How in the world is the United States Congress going to figure out and make decisions about these life-saving drugs and is going to set itself up as authority to make judgments about drugs that are urgent or necessary?’ Certainly, a patient is going to say, ‘When it’s my case, you bet it’s urgent there, Congressperson.’

“Why don’t we start with you, Dr. Conti? This to me is sort of the $64,000 question – that somebody is going to have to be part of guiding the Congress and the country through what really constitutes how you get the reimbursement in those areas that have been declared to be urgent and necessary. So start with you, Dr. Conti, and just go down the row. And I’d like to hear about how you all would go about making that kind of judgment because certainly Sen. Hatch and legislators who retrying to work on a bipartisan basis are going to have to wrestle with that issue. Dr. Conti?”

Dr. Rena Conti, Assistant Professor of Health Policy and Economics at the University of Chicago:

“Thank you. Clearly, information regarding the availability of therapies and its distribution geographically and by physician type is critical to understanding [and] to really anticipating and alerting the American population regarding the possibility of a shortage of a medically necessary therapy. There are other existing systems in place that are overseen by the FDA that monitor shortages for other medically necessary drugs, including plasma protein therapies.

“In terms of defining necessary, I think there are at least three important features. The first is, I think, that you would need a medical panel of experts to really define what we mean by medically necessary. However, that’s possible that type exists within CMS and also within FDA already.

“First, it would probably have to be used within a fatal condition. Secondly, there would have to be limited or no therapeutic substitutes. And third, if there were any therapeutic substitutes, there would have to be no or very limited head-to-head trials establishing both safety and efficacy in limited patient populations but also in the general patient population that could be affected by these shortages.”

Sen. Ron Wyden (D-Ore.):

“Any other witnesses that would like to help counsel the Congress on how to wrestle with the definition you want us to establish?”

Dr. Scott Gottlieb, Resident Fellow at the American Enterprise Institute:

“You could move all the sterile injectable drugs into a new reimbursement scheme. In the context of cancer, you’re only talking about, I think, a few dozen drugs. So we’re not talking about a huge subset of drugs and most of them are low-priced drugs to begin with.”

Sen. Ron Wyden (D-Ore.):

“So you’d draw the line – and this is an important point – you’d draw the line on an urgent drug, for example, as a cancer drug and say that’s life-saving?”

Dr. Scott Gottlieb, Resident Fellow at the American Enterprise Institute:

“Well, I’m not looking at in terms of whether it’s an urgent drug or not. I’m looking at whether in terms of it’s an expensive to manufacture where there needs to be some margin built in for the allowance of companies to invest in better manufacturing, especially in an environment where the regulatory burdens are increasing. So that applies to all the sterile injectable drugs. I would treat them differently as a category of drugs. We’re not talking about a few hundred drugs in total.

“In response to your last question, just quickly, when we talk about moving away from the ASP pricing scheme for these drugs, we’re not talking about increasing reimbursements to the doctor per se. We’re talking about allowing the companies to take price increases that wouldn’t then leave the doctor underwater. Part of the reasons why – there’s two reasons primarily why the manufacturers right now can’t take price increases. One is their GPO contracts. I’m sure Congress doesn’t want to get into the business of regulating their contracting. But the other is that if they take a price increase, at least on the outpatient side, they’re going to leave the doctors underwater for six months. Since they make very little money on these drugs anyway and in many cases these drugs are loss leaders, the last thing they’re going to do is to leave customers underwater for six months and incur the wrath of their customers. They’d rather just either take the loss or get out of the business altogether.”

Sen. Ron Wyden (D-Ore.):

“I know my time is up, but Sen. [John] Cornyn could those two just finish on this question of how we make judgments about what’s urgent and necessary?”

Dr. Patrick Cobb, Frontier Cancer Center and Blood Institute:

“I think the idea of treating the sterile injectables as a class makes a lot of sense. It gets out of the value of judgments in which drugs is critical and which is not. But for cancer patients, it’s almost all of the generic injectables.”

Dr. Kasey Thompson, Vice President of Policy, Planning and Communications for the American Society of Health-System Pharmacists (ASHP):

“Sen. Wyden, that’s a very good question. We’ve been tracking this issue for a long time. Drug shortages are all over the place. I think one thing we have to point out is that this is a very broad category. Oncology drugs are obviously the ones that concerns us the most because of the implications. But here, you’re looking at drugs like heparin, anesthetics that are used in the OR suite, drugs that are used for feeding patients parenterally. So it’s really a moving target and we think there’s going to have to be some more transparency in the entire supply chain so we can create some predictive models. Because creating the perfect list of medically necessary drugs is virtually impossible. We’ve been doing this for a very long time and it’s very hard to do.”

Sen. Ron Wyden (D-Ore.):

“Thank you, Sen. Cornyn, for letting me impose on your time.”

Second Round of Q&A:

Sen. Ron Wyden (D-Ore.):

“Just a few other questions for you all to dig a little deeper in the nuts and bolts of how some of the changes might affect people who are suffering today. Probably listening to the show saying, ‘What’s Congress going to do to actually get some relief for my loved ones in my household?’

“One issue I wanted to ask you, Dr. Thompson, because you’ve been looking at these issues – a whole host of issues – and cost issues as well. Do you have an idea of how much the shortages are costing the federal government in the form of reimbursement for costlier drugs? In other words, the kind of example comes to mind is a brand name drug that Medicare was say paying for went generic. It’s now on shortage. So I assume in some instances that brand name drug is being prescribed. So if that’s the case, how many brand name drugs are there like that and if you could give us some sense of the cost, that would be very helpful.

“Because I think one of the issues this committee will have to wrestle with is certainly we’re going to have to get ways to get more affordable generics, these injectables, in particular, out to people who are suffering. But people are going to say, ‘Well, that’s going to cost some money.’ And if Dr. Thompson can enlighten us on whether the government is now spending even more money on these costlier alternatives in terms of the shortage, that might be a way to make the case that, ‘Look, we can hold the costs down here by cutting the reimbursement costs of the alternatives.’ Do you have any sense of what the government is paying as a result of these shortages for brands?”

Dr. Kasey Thompson, Vice President of Policy, Planning and Communications for the American Society of Health-System Pharmacists (ASHP):

“We’re just now beginning to drill down into our data to find some correlation to help answer that question. I think others may have a better answer to this than I do. Clearly, when there’s a brand name product available, that product costs more.”

Sen. Ron Wyden (D-Ore.):

“How many drugs – can you give us a sense as to how many drugs there might be? Would there be five? Would it be 10? Would it be 20? How many drugs, even if you don’t have an exact number, might fit this category of brand name being reimbursed by Medicare when there is a shortage?”

Dr. Kasey Thompson, Vice President of Policy, Planning and Communications for the American Society of Health-System Pharmacists (ASHP):

“You know, sir, I’d probably have to get back to you on that.”

Sen. Ron Wyden (D-Ore.):

“A significant number?”

Dr. Kasey Thompson, Vice President of Policy, Planning and Communications for the American Society of Health-System Pharmacists (ASHP):

“I would say a significant number.”

Sen. Ron Wyden (D-Ore.):

“So there’s possibility that this inability to fix the incentives may result in significant additional costs to taxpayers, to Medicare, for not dealing with the shortage?”

Dr. Kasey Thompson, Vice President of Policy, Planning and Communications for the American Society of Health-System Pharmacists (ASHP):

“I think that’s a plausible thing to ask.”

Sen. Ron Wyden (D-Ore.):

“All right. Let me ask you all one other one. Maybe we’ll just kind of go down the row.

“If you’re listening to this and you or a loved one is suffering, you’re waiting and hoping for treatment. And I’ve sort of reached the point working in these health care issues – I was director at the Gray Panthers for a lot of years before I came to Congress and worked with senior citizens. People listen to these debates and they want to know when there’s really going to be a solution available. And of course, just plucking date out of the air is pretty hard to do. But let’s take the kind of situation where if the reimbursement issue was addressed in this committee. Some combination of the policies that we’re talking about here today, and as you know, Dr. Conti, I have some real questions about the relationships between the physicians and the manufacturers – you gave some thoughtful answers on that. Let’s say that issue is resolved. How long would it take to get these drugs produced and out to patients?

“Sen. [Ben] Cardin was absolutely right. People consider this urgent priority – they don’t want to hear about that it’s going to take eternity. So as we wrap this hearing up, if this committee gets it right, in terms of these reimbursement changes, how long would it take to get the drugs produced and out to patients?”

Dr. Rena Conti, Assistant Professor of Health Policy and Economics at the University of Chicago:

“I think that is one of the key questions in this issue. Unfortunately, I think think the time theme varies quite substantially by generic firm and also by the drugs in terms of responding to these types of incentives. I have seen estimates of anywhere between getting production up and running from four months all the way to seven years.”

Sen. Ron Wyden (D-Ore.):

“So would it be fair to say, again, I want to use the terminology that I used with Dr. Thompson because my sense is there are significant additional costs to the government for paying for costly treatments because of the shortage is not being dealt with. Would it be fair to say of you, Dr. Conti, that a significant number of drugs that are in shortage could get out to people, say, within six months? You said four. Would that be a fair characterization?”

Dr. Rena Conti, Assistant Professor of Health Policy and Economics at the University of Chicago:

“I don’t know.”

Sen. Ron Wyden (D-Ore.):

“Okay. Any of you others want to comment on a time table? Because this is what’s people who are suffering want to hear. And that’s why Sen. Cardin asked the question. They want to follow these debates, but they want to see that sense of urgency. Any of the others want to give us a sense of the timetable?”

Dr. Scott Gottlieb, Resident Fellow at the American Enterprise Institute:

“I think the economic incentives and changing the price environment we’ve talked about here today is important for getting new manufacturers into space and for expanding new capacity for manufacturers drugs. But it’s not a short-term solution, in my view, in terms of the next six months type of solution. Because switching over to an existing manufacturing line to make a new drug, you’re probably looking at a year under optimistic situations. Setting up new manufacturing, you’re looking at two to seven years, and probably closer to seven years to stand up a brand new facility de novo. So that’s a long-term solution to make sure these markets don’t get into trouble again in the future.

“I think shorter term, we need to look at the existing capacity that has been taken offline. I think that’s our best bet of trying to alleviate the shortage within the next six months. I don’t think there’s any – I don’t think that’s a sure bet that that’s going to be the most efficient process getting those facilities back online.”

Sen. Ron Wyden (D-Ore.):

“They’re not mutually exclusive. There can be efforts to deal with expanding capacity in the short-term, but I continue to believe that people want to hear how long it’s going to take to get at the root cause. We’re wrapping this hearing up, and you all have been very helpful. For me, what it comes down to, Dr. Cobb, is what you’ve said several hours ago when we began. To have you and wonderful practitioners on the front lines in this fight against cancer, like Dr. Druker, to have to say to patients every day in America, ‘Drugs that will relieve your suffering and relieve your pain – they aren’t available. We’re not completely sure why, and they’re having all kinds of debates in Washington, D.C.’ That’s just not acceptable.

“So we’ve got to find a way to speed this up. We’ve got to find a way to speed this up, in terms of both the short-term that you [Dr. Gottlieb] just touched on a moment ago in terms of capacity. We’ve got to shorten that kind of period for dealing with the root cause of the problems. It’s not acceptable in my view to say to cancer patients, ‘Well, we’ll see what we can do in seven years.’ That’s just not right.”